Bangko Sentral ng Pilipinas (BSP), the Philippines’ central bank, has taken advantage of FTX’s demise to highlight the dangers of investing in digital assets. BSP Governor Felipe Medalla reiterated his former position on virtual currencies in an interview with the Philippine Daily Inquirer, stressing that they present major dangers to investors.
I’ve stated numerous times in the past that investing in crypto assets is exceedingly hazardous and that investors should only put up money they can afford to lose.
Medalla asserted that digital assets relied on the “greater fool idea” to survive not long after being named BSP governor. According to the greater fool idea, investors continue to invest in overpriced assets in the hope that someone will eventually be interested in buying them for a higher price.
Medalla also criticized using the product as payment because of its incredibly high volatility. Additionally, he disparaged them for their effects on the environment, particularly proof-of-work (POW) consensus procedures. Despite his firm attitude, Medalla acknowledged that virtual currencies might be useful in countries where residents are subject to economic repression.
“In the case of BTC, it’s also bad for the environment because the amount of electricity that the miners use is bigger than the electric consumption of some countries. So what is its saving grace? Its saving grace is that in countries with so much financial and economic repression, it’s a good thing because, in countries with terrible financial systems and so on, it’s an alternative to the government,” Medalla expressed.
The reiteration of his previous * is coming on the heels of Sam Bankman-Fried’s FTX collapse and the ripple effect that it threatens to have on the broader ecosystem. Thousands of investors are staring at the grim possibility of losing their funds, while several firms in the industry have announced layoffs to ensure their long-term survival.
The Philippines has no plans to ban digital assets
For all its criticisms of virtual currencies, the BSP has no plans to impose a blanket ban. However, it is considering the option of an improved regulatory framework to guide the activities of industry participants.
Part of its attempts at regulation includes halting the registration of new digital asset firms in the country for three years. The pause on registration kicked in on September 1 and will allow the BSP to conduct a reassessment based on market development, according to a released memo.
Digital asset usage in the Philippines has soared to new highs with Web 3 gaming, non-fungible tokens (NFTs), and the metaverse championing the adoption. Several studies have also pointed out their usage in remittances as a reason for the increasing usage in Southeast Asian countries.
Watch: The BSV Global Blockchain Convention panel, Law & Order: Regulatory Compliance for Blockchain & Digital Assets
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